April 20, 2024

Diabetestracker

Passion For Business

Webcast excerpt: The difference between bonds and dividend-paying stocks

Transcript

… You see this conduct that occurs really a little bit when you’re in a minimal fascination charge surroundings, people are striving to get extra generate. But the point you have to recall is that when you very own a inventory, whether or not it is a authentic estate investment decision belief, a significant-dividend-yielding inventory or fund, it is an fairness.

So when you have a downturn in the fairness industry, you’re likely to see the principal value in people kinds of investments decrease pretty substantially. So, yet again, indeed, it is an cash flow-producing asset however, from a diversification standpoint, it will not hold up the way a bond will hold up in a downturn in the industry. And you do want that diversification to assist you cut down some of the volatility in your total portfolio.

So it is some thing that investors have to be incredibly cognizant of. When they’re using on that extra risk, there is a consequence involved with it, and they could see some important principal erosion that comes together with that in a downturn.

Important details

All investing is subject matter to risk, together with the probable loss of the money you spend.

Diversification does not be certain a financial gain or secure from a loss.

Investments in bonds are subject matter to fascination charge, credit, and inflation risk. 

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